Patent Lawsuit Could Cost Billions

A recent patent lawsuit (Pequignot v. Solo Cup Co.) in federal circuit court has the intellectual property world taking note and offers important lessons for businesses. The Solo Cup Co. is being sued by a patent attorney claiming the company is misleading consumers by marking its products with expired patent numbers.

Patent law provides for a fine up to $500 for each offense of false patent marking. Solo Cup Co. has produced an estimated 20 to 50 billion products since the patents expired. While courts have broad latitude in defining what constitutes an “offense,” and are unlikely to consider each marked product a separate offense, Solo could still face significant fines for patent mismarking.

This unusual case raises the question of how businesses can protect themselves from patent-marking bounty hunters. Given that federal law allows individuals to sue for false marking and reap monetary benefits, it is imperative that companies learn how to avoid false-marking liability.

The first step is to mark patented products with the corresponding patent number(s). Assuming your products are correctly marked and the patent is in force, here are some tips on how to protect your company against false-marking issues:

Pay attention to detail. When your patent expires, stop marking the product even if it means altering the production process. Otherwise, you risk accusations of false patent marking. Outsiders can argue that you are deceiving the public about the existence of patent protection for the marked product. Because the false-marking statute allows individuals to sue, anyone can monitor for false marking and file suit when they believe a product is improperly marked. That person collects half the damages awarded if false marking is found, and the other half goes to the government.

Patent ongoing innovation. Your patent has an expiration date 20 years from when you first file, but you can still patent new and improved changes to the product that increase the market value. This offers additional product protection beyond the length of the original patent.

Build your fan base. During your period of exclusivity, establish your market and develop a strong brand name. Your brand identity can be trademarked, which will become your most valuable protection asset once the patent expires.

Use your trademark. A strong trademark will help you continue dominance despite expired patents, even though it can’t exclude competitors entirely. Customers are loyal to brands they like and a strong trademark demonstrates the relationship you have built with consumers.